SUN IT EXPORTS, Jaipur V. ITO, Jaipur

ITA 920/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87547 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 17-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAKASH MEENAJCIT DHK
• Assessee Lawyers: G M MEHTACA
• Keywords: Reopening of assessment; Bogus purchase; Borrowed satisfaction
• Section: 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 920/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06. M/S SUN IT EXPORTS, JAIPUR. CUKE VS. THE ITO, WARD 2(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABFFS5671K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G. M. MEHTA(CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI PRAKASH MEENA(JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.03.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21 /03/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)- I, AT JAIPUR DATED 10.11.2012 PERTAINING TO A.Y. 20 05-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAI NING THE LEGALITY OF ACTION U/S 147 OF IT ACT, INITIATED BY LD. AO ON BO RROWED INFORMATION WITHOUT MAKING ANY INDEPENDENT INQUIRY OR WITHOUT C ONFRONTING M/S VIJAY GEMS WHOSE SALES ADDED IN THE HANDS OF THE ASSESSEE BY TREATING IT AS FAKE AN BOGUS IGNORING THE PROVED FACTS THAT THE AS SESSEE FIRM WAS NOT IN EXISTENCE IN PERIOD RELEVANT TO A.Y. 2005-06. 2. LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ADDITION OF RS. 5,35,576/- ON ACCOUNT OF SO CALLED PURCHASES FROM M/S VIJAY GEMS TREATED AS UNRECORDED AND PROFIT THEREON BY IMAGING THE TOTAL SALE OF THE PURCHASES GOODS, IGNORING THE FOLLOWING FACTS: (I) THE ASSESSEE FIRM WAS NOT EXISTENCE IN A.Y/ 200-06; (II) THESE PURCHASES FROM M/S VIJAY GEMS WERE MADE BY OT HER PERSON NAMELY MRS. SUNITA OSWAL, THEN PROP. SUN IT EXPORTS (PAN AAGPO8096E) IN A.Y. 2005-06. 2 ITA NO. 920/JP/2012 M/S SUN IT EXPORTS. 2. BRIEFLY, STATED THE FACTS ARE THAT THE CASE OF T HE ASSESSEE WAS REOPENED FOR ASSESSMENT AND ASSESSMENT U/S 143(3)/147 OF THE INC OME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 3/12/2010 WHILE FRAMING THE ASSESSMENT THE ASSESSING OFFICER COMPUTED INCOME OF RS. 8,52,430/- AS AGAINST THE RETURN INCOME OF USE NIL. THE ASSESSING OFFICER MA DE ADDITION ON ACCOUNT OF UNEXPLAINED PURCHASES OF RS. 6, 81,943/- AND ON ACC OUNT OF UNDISCLOSED PROFIT OF RS. 1,70,485/-. AGGRIEVED BY THIS, THE ASSESSEE PREFER RED AN APPEAL BEFORE LD. CIT(A). BUT HOWEVER, PARTLY ALLOWED THE APPEAL. THEREBY, T HE ASSESSING OFFICER WAS DIRECTED TO REMAIN THE GROSS PROFIT. HOWEVER, THE REOPENING OF THE ASSESSMENT WAS CONFIRMED. THE ASSESSEE IS IN FURTHER APPEAL BEFOR E THIS TRIBUNAL. 3. THE FIRST GROUND IS AGAINST LEGALITY OF REOPENI NG OF ASSESSMENT U/S 147 OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REOPENING OF THE ASSESSMENT. HE SUBMI TTED THAT FIRSTLY THE ASSESSMENT IS REOPENED ON THE BASIS OF THE BORROWED SATISFACTION AND SECONDLY, THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACTS THAT THE ASSES SEE FIRM CAME INTO EXISTENCE ONLY ON 21/03/2006. THE LD. COUNSEL FOR THE ASSESSEE HA S RELIED UPON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN T HE CASE OF CIT VS. SHREE RAJASTHAN SYNTAX LTD. (2008) 217 CTR(RAJ) 209. FURT HER, RELIANCE IS PLACED ON THE JUDGMENT OF THE HONBLE HIGH COURT RENDERED IN THE CASE OF CIT VS. PRADEEP KUMAR GUPTA (2008) 303 ITR 95 (DEL). IT IS CONTENTED THA T WHEN EXISTENCE OF THE ASSESSEE AFFIRM THE ADDITION MADE BY THE ASSESSING OFFICER A ND CONFIRM BY THE CIT, NO BASIS IS PROVIDED FOR ARRIVING AT SUCH FIGURES. 3 ITA NO. 920/JP/2012 M/S SUN IT EXPORTS. 3.1 ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENT ATIVES AS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AUTHORITIES BELOW ARE JUSTIFIED IN REOPENING OF THE ASSESSMENT WHEN THERE WAS MATER IAL EVIDENCE WAS AVAILABLE. 3.2 WE HEARD THE RIVAL CONTENTIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS PLACED ON RECORD, A PARTNERSHIP DEED DATED 21/3/2006. THIS D EED CAME INTO FORCE WITH EFFECT FROM 21/3/2006. THEREFORE, IT CAN BE INFERRED THAT THE PARTNERSHIP DEED CAME INTO EXISTENCE WITH EFFECT FROM 21/3/2006. IT IS CONTEN TED THAT PRIOR TO THE PARTNERSHIP CAME INTO EXISTENCE THE BUSINESS WAS BEING CARRIED OUT UNDER THE PROPRIETOR OF ONE OF THE PARTNERS NAMELY SHRIMATI SUNITA OSWAL. WE H AVE GIVEN OUR THOUGHTFUL CONSIDERATIONS TO THE CONDITIONS OF THE PARTIES, RE VENUE HAS NOT DISPUTED THE FACT THAT THE PARTNERSHIP CAME INTO EXISTENCE ONLY ON 21 /3/2006. WE FIND THAT THE ASSESSING OFFICER HAS NOTICED THAT BOGUS PURCHASE O F RS. 5,38,165/- WERE MADE ON 30/9/2004 AND OF RS. 1,43,778/- ON 7/2/2005 TOTALIN G TO RS. 6,81,943 FROM M/S VIJAY GEMS ON 10/1/2005. IT IS ALSO OBSERVED BY THE ASSE SSING OFFICER THAT A SURVEY WAS CONDUCTED BY BCTT WING, (JP) IN THE CASE OF M/S VIJ AY GEMS DURING THE FINANCIAL YEAR 2007-08 AND IT WAS FOUND AS PER EXHIBIT NO. A- 13 IMPOUNDED DURING THE COURSE OF SURVEY, THERE WAS SALE ON GOODS OF RS. 5,38,165/ - ON 30/9/2004 AND OF RS. 1,43,778/- ON 7/2/2005. ADMITTEDLY, BOTH THESE TRA NSACTIONS WERE EXECUTED PRIOR TO THE ASSESSEE CAME INTO EXISTENCE UNDER THESE UNDISP UTED FACTS. THEREFORE, WE ARE UNABLE TO SUSTAIN THE ACTION OF THE ASSESSING OFFIC ER FOR REOPENING OF THE ASSESSMENT. UNDER THESE FACTS, IN OUR CONSIDERED VI EW, THAT THE REOPENING OF ASSESSMENT IS EX-FACIE IS ILLEGAL AND UNJUSTIFIED. ACCORDINGLY, WE HEREBY QUASH THE ASSESSMENT ORDER DATED 3/12/2010. 4 ITA NO. 920/JP/2012 M/S SUN IT EXPORTS. 4. GROUND NO. 2 IS ON MERIT AS WE HAVE ALREADY QUAS HED THE ASSESSMENT, WE ARE NOT EXPRESSING OUR VIEW ON THIS GROUND. THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 920/JP/2012, IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 /03/20 17. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 21 /03/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S SUN IT EXPORTS, JAIPUR. 2. THE RESPONDENT THE ITO, WARD 2(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 920/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 5 ITA NO. 920/JP/2012 M/S SUN IT EXPORTS.